Election 2013: Reforming the City of London Corporation

In March, elections to the City of London Corporation take place. They could be used to challenge the unaccountable power wielded by this state-within-a-state.

On the
21st March the City of London Corporation will hold elections for its ‘Common Council’,
the democratic component in its ancient system of local government. To
understand why elections to this small, historic local authority matter it is
necessary to appreciate the role that the Corporation plays in the life of the
United Kingdom. For, as understanding of the importance of the Corporation
grows, so does the case for using the 2013 elections to campaign for its reform.

The
Corporation in history

The City
of London Corporation is the only local government body on mainland Britain
whose activities and governance are not defined and limited by statute. It is a
local authority and is bound by the legislation that prescribes the functions
of a local authority. But it is many other things as well. Ask how it can be a
private corporation as well as a local authority or how it came to be the
self-styled ‘Voice of the City’ and the answer is simple; because it chose to
be and Parliament has not legislated to prevent it. Ask why Parliament has
allowed this anomalous body to flourish at the heart of the unitary state and
the answer revealed by history is that the wealth and power of the Corporation
has always been such that the English and then British state has found it
necessary to reach accommodations with the city-state in its midst.

In the
high Middle Ages the City of London’s struggles for independence from the
English Crown were resolved through a compromise in which the City promised
loyalty to the King who, in return, promised not to interfere in its affairs. This
distance from the feudal Crown enabled the City to grow into one of Europe’s
most important financial and trading centres and the Corporation that governed
it developed into a dense patchwork of rival institutions and offices that was
the closest that pre-industrial Britain came to possessing an open, democratic
public life.

By the
17th century the Corporation’s constitution had assumed the shape that it
retains today: at its heart were the guilds, the most powerful of which were
the ‘livery companies’, which represented and regulated the trades that practiced
in London, were responsible for selecting the Alderman and from whose number
the Lord Mayor was selected. The final component in its system of government
was the Common Council directly elected by the commoners as it remains today.

The
modern Corporation

The modern
Corporation has retained these ancient forms but it was changed utterly in the
industrial age. As London was transformed into the modern metropolis, the site
of the historic city became a business district: its guilds and offices
increasingly occupied by the financial services industry.

The
Corporation became a bastion of conservatism; fighting off attempts by national
politicians to subsume it into a system of local government that was fit for
the industrial age; retaining, as it retains today, its own special duties and
privileges amid the structures of modern municipal government that were
constructed around it; maintaining a franchise in which the electorate were not
only City residents but also those who had property within the City (a
franchise that Parliament extended in 2002 to Corporations located in the City,
providing them with a number of votes, based on company size, to be allocated amongst
the workforce). Unsurprisingly, its Common Council elections are the only local
government elections in which modern party politics have never gained a
foothold.

The
Voice of the City

When
the financial services industry was transformed in the 1980s, the Corporation re-rebranded
itself as ‘the Voice of the City’; a sleek representative body for an industry
re-born. Its ability to do so rested on two advantages. First, it’s already influential
place at the heart of the British state and establishment. Second, it had ‘The
Cash’.

The City
Cash is the money that the Corporation has built up over centuries as a private
corporation. Recently revealed as amounting to well over a billion pounds, it
is spent on a variety of projects and investments including many in which there
is a clear public interest (the upkeep of Epping Forest and Hampstead Heath)
others in which the public interest is debatable (funding the independent,
fee-paying schools in the City, investing in property around the capital). Much
of it is spent on promoting the interests of London’s financial services
industry, not simply in the United Kingdom but also throughout the world,
through its Lord Mayor whose principle role is as ‘ambassador for the UKs
financial and professional services’ and through its offices in Brussels, Beijing,
Shanghai and Mumbai.

The
Corporation’s activities generated little public concern until the City lost
its aura of competence and invincibility in the latest financial crisis. It may
now have entered another era of responding to and seeking to placate its
critics.

Calls
for reform

In the autumn
of 2011 ‘Occupy the London Stock Exchange’ brought their demands for greater
transparency of the Corporation to the doors of St Paul’s Cathedral. In
November 2012 the City Reform Group was
launched. Its aim is to reform the Corporation through debate and democratic
competition. It is not a political party and was launched with support from
across the political spectrum, from former Occupiers to the Conservative MP
David Davis. It seeks to encourage and support candidates who are not from
traditional City backgrounds to stand in the 2013 election and asks all candidates
to sign up to a series
of broad pledges for improving the Corporation that would, in place of a
party manifesto, provide a yardstick to measure the performance of those
elected to office.

One of
these pledges is to work to ensure that the Corporation publishes the accounts
for the Cash. Only a few weeks after the launch, the Corporation published a
document entitled ‘The City’s Cash Overview: Summary of Performance 2011-12’.
As the title indicates, this document was not a detailed account of the
Corporation’s spending decisions. The battle for transparency goes on.

Reform
of the Corporation should not of course be confused with reform of the
financial services industry. However, the 2013 elections will be a test of
whether the desire for reform is sustained enough to bring democratic challenge
and debate to the institution that represents that industry in the UK. On the
other hand, if the attempt to turn a ‘buggin’s turn next’ election into a
genuine contest fails, it will be seen within the Corporation and sections of
the City as yet another signal that it can return to business as usual.

This,
despite the skewered franchise, is reason enough to engage in the election. But
there is also the serious job of debating what sort of institution the
Corporation should be.

What
sort of Corporation?

Transparency
is the most urgent demand. A detailed breakdown of the City Cash should be regularly
published, and publically debated. It should voluntarily subject all its
activities to the requirements of the Freedom of Information Act. There is
growing understanding of the need for private corporations to be subject to
transparency laws: the case for bringing transparency to this particular
private corporation could not be more compelling. Indeed, it is essential in
order to offset the dangerous combination of public duties and private
interests that lies at the heart of the Corporation.

The
Corporation’s own limited exercise in transparency has revealed that is one of
the few local government bodies with money to spend. So, how should it spend it?
There are at least three areas to
consider.

First,
the Corporation does, through its City
Bridge Trust, provide substantial donations to good causes throughout
London. However, at a time when the budgets of other London authorities are
being cut, it is important to consider whether the Corporation can better use
its resources to support the public services of the London Boroughs on its
doorstep, who provide much of its workforce.

Second,
with the legacy of the guilds in mind there is a good case that it should use
its resources to promote higher standards of ethical conduct within the City. The
promise of better self-regulation is, of course, a useful tool for those who
wish to see off the threat of more stringent external regulation and the City
should be encouraged to put resources into meaningful improvements rather than
the ethical whitewash that characterised much of the Lords Mayor’s 2010-2011 ‘Initiative
to Restore Trust to the City’ (access the
report here).

Finally,
there is a strong argument that it should place its resources at the disposal
of civil society and consumer groups with an interest in understanding and
reforming a particular aspect of the financial services industry. If the Corporation
were to move from being simply the ‘voice of the City’ to enabling other
sectors of our society and economy to understand and speak to the financial
services industry it would be providing a valuable public service.

Whether
any of these themes will be taken up by candidates, or strike accord with the
Corporation’s narrowly drawn electorate, remains to be seen. On the 14th
February (Valentine’s Day) St Paul’s Cathedral will host a public meeting on
the future of the Corporation, organised by the City Reform Group, at which
proposals for reform will be discussed and debated with a representative from
the Corporation. Nominations for the Common Council election open on the 16th
March.

The opportunity
to debate the future of the Corporation that the election offers is too
important to ignore. The vote may be restricted to those within the City itself
but it is an election in which not only all Londoners have an interest, but through
the City’s power and influence, affect the British public and the wider world.
It should be used to let the Corporation, the City and Westminster know that
the reform of this untouchable state-within-a-state is a demand that will not be
allowed to die.

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